Afghanistan ‘Tightens’ Currency Controls After Dollar Smuggling Reports from Pakistan

Afghanistan has imposed fresh foreign currency restrictions on people carrying cash out of the country after reports of US Dollar smuggling from Pakistan, reported Bloomberg.

The new currency controls were announced through Acting Prime Minister Mullah Mohammad Hassan’s office after a report that millions of dollars were being smuggled in each day from Pakistan and shoring up its battered economy.

As per the order, the Taliban have enforced fresh limits on carrying foreign currencies and new penalties including up to a year in prison. While a $5,000 limit was already in place, the decree reduced the amount that could be taken via road border crossings to just $500 and prohibited the transport of gold or precious stones out of the country.

The order also said, “If someone transfers $1 million, he will be imprisoned for a year, and for $100,000, he will be jailed for a month, and for less than the amount, he will receive ten days in jail”.

The order surprisingly mentioned that bringing in foreign currency is “prohibited,” but didn’t specify how much or under what conditions. Until today, the Afghan Finance Ministry would encourage individuals to bring in any amount of foreign currency.

This development comes less than a day after reports that traders and smugglers were bringing as much as $5 million into Afghanistan from across the border with Pakistan via illicit channels. Resultantly, these significant inflows of foreign currencies over the past 14 months have given the Taliban regime access to more than $9 billion in foreign reserves. But at the same time, these outflows are making it worse for Pakistan’s struggling economy.